Scoping study boosts confidence in South Australian graphite mine

A SCOPING study into a proposed graphite mine on South Australia’s Eyre Peninsula has found the project to be economically sound with an initial capital cost of $36 million.

The finding has Archer Exploration Limited’s 2873 sq km Eyre Peninsula Graphite Project on track to become one of Australia’s first new-era graphite mines.

Archer plans to lodge a formal mining lease application by the end of the year to initially develop the Campoona Shaft project near Cleve as a 110,000 to 140,000 tonnes per annum mining operation. It will then need to make further mining lease applications for nearby Central Campoona and Wilclo South sites as it increases production up to 210,000 tonnes per annum by its eighth year of operation.

The mine will source feedstock from the three deposits and is expected to generate net pre-tax cash flow of AU$21.5 million a year for a life-of-mine pre-tax net cash flow of AU$366 million.

Indicated life-of-mine revenue is estimated at AU$858 million over 17 years.

Archer Managing Director Greg English said the proposed mine contained high-grade graphite that would be commercially attractive for a number of applications.

Campoona Shaft will produce up to 10,500 tonnes of graphite concentrate per year, to be shipped out through Port Pirie.

“The study has validated the project’s capacity to deliver a very solid platform for Archer on which to get into our maiden mining phase and then in the relative near-term, increase production rates and mine life, subject to the usual approval processes.

“Archer has in our Eyre Peninsula holdings, the enviable combination of high grade graphite resources, low operating and capital costs and the ability to produce a high purity concentrate commercially attractive for use in lithium ion batteries and other high value applications.”

A proposed graphite processing plant would be built by Archer and is expected to have a metals recovery of almost 90 per cent.

The study estimated the payback period to be within two years of operation with a steady state operating cost of about $1680/tonne of graphite in concentrate.

Contemporary graphite basket prices in Australia are closer to $3600.

Initial pre-production cost to establish the mine for the first three years is about $36m.

Overall map of Archer graphite operations on the Eyre Peninsula.

Graphite is a highly effective conductor of heat and electricity – it is also the strongest natural material in the world.

It is commonly used to manufacture lithium-ion batteries, steel, electric cars, carbon fibre cables, lead and grease.

More than a million tonnes of graphite is mined globally each year. China is the world leader in graphite production, unearthing about 780,000 tonnes in 2015.

English said Archer believed the project had natural flake graphite with a significant purity advantage over conventional flake sold out of China.

He said the company planned to fully test a series of concentrates for its suitability to manufacture spherical graphite.

Archer’s graphite will also be tested for its suitability into mainstream graphite applications.

Mining companies Renascor and Lincoln Minerals are also working to develop graphite mines on Eyre Peninsula. The region, about 250km northwest of South Australia’s capital Adelaide, is home to the bulk of Australia’s known graphite deposits.